If it Happened | We Covered it

March 12, 2018March 12, 2018

Who Will Be the First Trillion Dollar Company – Amazon or Apple?

Reuters currently reports that Apple (AAPL) has a market value of $839 billion. Which is about $141 billion greater than Amazon, who is sitting at $752 billion. Apple stock has grown an incredible 24% in the last year, but what’s even more incredible is the fact that Amazon’s share price has grown by 83% over that same time period. Current and past stock increases aren’t a reliable predictor of future performance, but some are estimating that Amazon might beat Apple to the one trillion dollar mark.

Back in January, Amazon announced that it along with Berkshire Hathaway Inc, and JPMorgan Chase & Co would form a company aimed at cutting health care costs for their employees. This move was widely seen as a threat to the existing U.S. healthcare system, which made it seem like Amazon had the ability to disrupt markets. What does this actually mean? Well, nothing substantial, but I think it’s worth noting that we are living in an era where tech giants are becoming more influential than the government in many ways.

There are some Wall Street analysts that aren’t as quite enthusiastic about the growth of Apple and Amazon. Analysts on average expect Apple’s stock price to rise 11% within the next 12 months – which would put their market capitalization at $989 billion. Whereas analysts who are covering Amazon expect its stock to rise 10% within the next year, and that would give it a market value of $823 billion.

Let’s think about this for a moment though – without the numbers. These two companies do drastically different things. Sure, Amazon does sell devices, but not to the same extent as Apple. What I think is interesting is that two completely separate, and arguably different companies are in quite the race to get to the $1 trillion mark. I wonder if we’re comparing apples to oranges here – no pun intended.

That said when it comes to deliverables – who is doing it better? You know that my answer is going to be Amazon, but not because they actually deliver things. How many times have you ordered something using your Prime Membership and it took more than two (or one) days? So when I say deliverable, I mean saying that you will give something to the consumer on a specific day, and then having it available on that day. Apple has been falling short in this arena. Lots of times they have put dates out there, and not been able to actually make those dates.

Now, I’m not saying that it will impact the price of their stock, or what their market capitalization looks like. But I think it impacts consumers willingness to buy the new products. Or even get invested in it. While I think it’s an interesting news story to see who is going to make it to that trillion dollar mark, first, I’m not sure that it’s really fair to compare the two. Like I said – they’re not exactly in the same arena. Except for Apple TV and the Homepod, but look how well that has turned out for Apple. Sales on the Homepod are a lot lower than expected.